4.1 - The Role of Marketing Flashcards
Define marketing.
The management that links the business to the customer by identifying and meeting the needs of customers profitably. It does this by getting the right product at the right price to the right place at the right time
Name the 7 marketing functions.
Market research Product design Pricing Advertising Distribution Customer service Packaging
Name 5 market characteristics
Market size Market growth Competitors and ease of entry Differentiated or homogeneous products Segmentation
Define market size and how it is measured.
The total level of sales of all producers within a market
Measured in two ways:
Volume of sales (units sold)
Value of goods sold (revenue)
Manufacturer uses value or volume depending on what better reflects its position
Eg. Rolex will uses value as they sell fewer but more expensive watches
Why is the size of a market important?
Manager assesses whether a market is worth entering
Business can calculate their own market share
growth/decline of the market can be identified
Explain market growth.
The percentage change in the total size of a market (volume or value) over a period of time
Pace of growth depends on: economic growth, changes in consumer incomes, technological change, etc.
Depends on whether a market is saturated or not
Explain competitors and ease of entry.
Ease of entry: the lack of barriers for the establishment of new competitors in a market
More competitors and easier market to enter = higher price competition
What is the difference between differentiated and homogenous products?
Homogeneous products: goods that are physically identical or viewed identical by consumers (eg. milk, corn, bottled water, petrol)
Difficult to charge prices different from going rate for these products
Define segmentation.
Dividing a market into distinct groups of consumers who share common tastes and requirements
Market segmentation → companies able to target different groups of consumers: perceive value of certain products/services differently from each other
What are the differences between marketing goods and marketing services?
Consumer good: tangible physical product marketed to end users (consumers)
Consumer service: intangible provision of an activity to end users (consumers)
Services consumed immediately (cannot be stored), cannot be taken back to be repaired/replaced (service quality must be right the first time), people important for
service quality
Building trust
Time for delivery of service
Deliverability
Relationships
What is perceived value?
Goal of service company: instill high perceived value of the service in the minds of the customer
Emotional connection is key element in service marketing
What is market orientation?
outward looking approach that bases product decisions on consumer demand, as established by market research
Benefits:
Case of product failing is less
Consumer needs are met so the product will survive longer and make higher profits
Constant feedback from consumers helps product and marketing adapt quickly (earlier than competitors)
Limitations :
Business attempting to rescind to all trends may overstretch its resources and not do anything very well
Offering choice and range is expensive
What is product orientation?
an inward looking approach that focuses on making products that can be made - or have been made for a long time - and then trying to sell them
Businesses invent products believing that consumers will purchase them
Businesses concentrate their efforts on efficiently producing high-quality goods. (quality valued above market fashion)
Define social marketing.
This approach considers not only the demands of consumers but also the effects on all members of the public involved in some way when firms meet these demands
Focuses on stakeholders as well as business and its consumers
Attempts to balance company profits, consumer wants and societies interests
Considers long term welfare (consumer and societal - protecting environment and paying workers good wages)
Still identify consumer wants and needs but in a way that enhances consumer and societal welfare gives business competitive advantage
What is the difference in objectives for social marketing and commercial marketing?
Main objective of commercial marketing = financial return
Main objective of social marketing = social good
Define market share.
the percentage of sales in the total market sold by one business
Describe how market share is calculated.
Firms sales in time period divided by total market sales in time period. Multiply by 100 to get a percentage of market share.
What are the benefits of being the market leader (having the most market share)
Sales are higher than competitors in the same market: higher profits perhaps
Retailers keen to stock and promote best selling brands (can have prominent positions in shops)
If shops want to stock the product, it could be sold to them with a lower discount rate which must be offered by the smaller, competing brands. This and higher sales leads to higher profitability for the producer of the leading brand
Can be used in advertising or promotional material.
Consumers want to buy the most popular brands
Strong bargaining position with suppliers and retailers.
Suppliers: want to have long term contracts with most successful company (benefit their status + reliable)
Retailers: want to stock this product
This means lower costs and longer credit periods
Higher selling prices to and short payment period returns from retailers
Recruitment of high class employees is easier
Financing easier: banks and investors convinced that status means stability
What are the disadvantages of being the market leader?
Puts pressure on a business and staff to continue doing well
Business media looking for slippage and will report if a business is ‘failing’
Too much emphasis on market share might take attention away from profitability
Price cuts and and lower profit margins may help market share but might not be good in the long term
What are marketing objectives?
The goals set for the marketing department to help the business achieve its overall objectives
Why are marketing objectives important?
Provide sense of direction for marketing department
Progress monitored against targets
Can be broken down into regional and product sales targets to allow for management by objectives
Form basis of marketing strategy
What are the marketing objectives of for-profit organisations?
Business with short term profit targets focuses on maximising sales at highest price possible
Examples of a for profit organisations marketing objective inc. increase in:
Market share
Total sales
Average number of items purchased per customer visit
Frequency that a loyal customer shops
% of customers who are returning customers (loyalty)
Number of new customers
Customer satisfaction
Brand identity
What are the marketing objectives of non-profit making organisations?
Maximise revenue from trading activities
Increase recognition of the organisation by society
Promote the work and aims of the organisation to a wide audience
How do non profit making organisations differ from for profit organisations?
3 characteristics that non profit orgs. have that distinguish from for profit orgs:
Do not have external shareholders providing risk capital for the business
Do not distribute dividends - any profit is retained for further capital
Organisational objectives include some social, cultural, philanthropic, welfare or environmental dimension
